SB2983 SD1

SECTION 1. Chapter 467B, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§467B- Charitable fundraising platforms; platform charities; emergency periods. (a) During an emergency period, a charitable fundraising platform that is a trustee for charitable purposes shall be subject to the department's supervision for activities regulated by this section. Before soliciting, permitting, or otherwise enabling solicitations for purported charitable purposes for an affected area during an emergency period, a charitable fundraising platform shall register with the department on a form provided by the department. Persons or entities that meet the definition of a charitable fundraising platform and platform charity shall register as charitable fundraising platforms before conducting activities regulated by this section. Registrations under this section shall expire after one year and shall be subject to a registration and renewal fee imposed by the department. Fee revenues from this section shall be deposited into the solicitation of funds for charitable purposes special fund.

(b) During an emergency period, a platform charity that is a trustee for charitable purposes shall be subject to the department's supervision. The platform charity shall register with the department as a platform charity before conducting activities regulated by this section. If a platform charity engages the services of a charitable fundraising platform for purported charitable solicitations for an affected area during an emergency period, the platform charity shall promptly notify the department of the engagement, unless previously specified through the registration of the platform charity or charitable fundraising platform.

(c) Each charitable fundraising platform and platform charity shall file periodic reports with the department on a form provided by the department. A report shall be filed each month during an emergency period; provided that a final report shall be filed within thirty days after the end of the emergency period. Each report shall:

(1) Enable the department to ascertain whether charitable funds have been properly solicited, received, held, controlled, or distributed;

(2) Provide information on the number of donations made, the amounts raised, the length of time for distributing donations or grants of recommended donations, the fees charged by or through a charitable fundraising platform or platform charity, and information on recipient charitable organizations or other charitable organizations that were sent or were not sent donations or grants of recommended donations; and

(3) Not include the disclosure of personally identifiable information of donors or other persons using a charitable fundraising platform.

(d) A platform charity shall not facilitate acts of solicitation on a charitable fundraising platform during an emergency period unless the platform charity is in good standing.

(e) During an emergency period, a charitable fundraising platform or platform charity shall only solicit, permit, or otherwise enable solicitations, or receive, control, or distribute funds from donations for purported charitable purposes for an affected area for recipient charitable organizations or other charitable organizations in good standing. To determine good standing of recipient charitable organizations or other charitable organizations, a charitable fundraising platform or platform charity may rely on electronic lists periodically published by the Internal Revenue Service, the department of taxation, or the department; provided that if none of the foregoing agencies publishes a list, then the charitable fundraising platform or platform charity shall not be required to comply with this section for the length of time that lists are unavailable.

(f) During an emergency period, and with respect to purported charitable purposes for an affected area, a charitable fundraising platform or platform charity that performs, permits, or otherwise enables tier 1, tier 2, or tier 3 activities shall, before a person can complete a donation or select or change a recipient charitable organization, provide conspicuous disclosures that prevent a likelihood of deception, confusion, or misunderstanding, including:

(1) A statement that donations are made to the charitable fundraising platform, the platform charity, the recipient charitable organization, or the person engaging in peer-to-peer charitable fundraising, whichever is applicable;

(2) A statement that a recipient charitable organization may not receive donations or grants or recommended donations, with an explanation identifying the most pertinent reasons under which a recipient charitable organization may not receive the funds; provided that the explanation as to the maximum length of time may be provided through a conspicuous hyperlink, so long as the disclosure is conspicuous when the hyperlink is selected; provided further that this paragraph shall not apply when there are no circumstances under which a recipient charitable organization may not receive the funds;

(3) The maximum length of time it takes to send the donation or a grant of the recommended donation to a recipient charitable organization with an explanation as to the length of time, unless the donation is sent contemporaneously to a recipient charitable organization after the donation is made; provided that the explanation as to the maximum length of time may be provided through a conspicuous hyperlink, so long as the disclosure is conspicuous when the hyperlink is selected;

(4) The fees or other amounts, if any, deducted from or added to the donation or a grant of the recommended donation that are charged or retained by the charitable fundraising platform, platform charity, or any other partnering vendor, other than digital payment processing fees; provided that this paragraph shall not apply to tier 3 activities when no fees or amounts are deducted or added; and

(5) A statement as to the tax deductibility of the donation; provided that this paragraph shall not apply to tier 3 activities.

(g) A charitable fundraising platform or platform charity that solicits, permits, or otherwise enables solicitations during an emergency period shall obtain the written consent of a recipient charitable organization before using its name in a solicitation for a purported charitable purposes for an affected area. Written consent shall be provided directly to the charitable fundraising platform or platform charity, or may be provided to a charitable fundraising platform or platform charity and apply to any affiliated charitable fundraising platforms expressly identified in an agreement providing consent, by one authorized officer, director, trustee, or other duly authorized representative of the recipient charitable organization. Written consent pursuant shall not be required for tier 1, tier 2, or tier 3 activities, if the charitable fundraising platform or platform charity:

(1) Only references the recipient charitable organization's name, address, telephone number, internet website, including through a hyperlink, employer identification number, corporation or organization number, or registration number with the department, classification in the National Taxonomy of Exempt Entities system, publicly available information from the recipient charitable organization's tax or information returns filed with the Internal Revenue Service, publicly available information from the recipient charitable organization's reports filed with the department, or other information set forth in rules adopted pursuant to chapter 91;

(2) Conspicuously discloses, before persons can complete a donation or select or change a recipient charitable organization, that the recipient charitable organization has not provided consent or permission for the solicitation, and has not reviewed or approved the content generated by persons engaging in peer‑to‑peer charitable fundraising, when applicable;

(3) Removes any recipient charitable organization from its list or any solicitation regarding the recipient charitable organization upon written request by the recipient charitable organization, and verification that the request is legitimate; provided that requests shall be promptly verified and shall take no longer than three business days for removal to occur after verification is completed;

(4) Does not require that a recipient charitable organization consent to any solicitations as a condition for accepting a donation or grant of a recommended donation; and

(5) Is compliant with all applicable provisions of this chapter and rules adopted pursuant to chapter 91.

(h) After donors contribute donations based on tier 1 or tier 2 activities during an emergency period, and with respect to purported charitable purposes for an affected area, the charitable fundraising platform or platform charity shall promptly provide a tax donation receipt in a format determined by the department.

(i) The charitable fundraising platform or platform charity shall not divert or otherwise misuse the donations for purported charitable purposes for an affected area that the charitable fundraising platform or platform charity receives during an emergency period through solicitation on the charitable fundraising platform, and shall hold them in a separate account or accounts from other funds belonging to the charitable fundraising platform or platform charity. The charitable fundraising platform or platform charity shall promptly ensure donations and grants of recommended donations are sent to recipient charitable organizations with an accounting of any fees imposed for processing the funds, and in accordance with any rules adopted pursuant to chapter 91. A platform charity shall be vicariously liable for a charitable fundraising platform's misuse of funds, and vice versa.

(j) If a charitable fundraising platform or platform charity enters into any contracts with a vendor to solicit, receive, control, process, distribute, and otherwise account for donations on the charitable fundraising platform, and the contract is in effect during any portion of an emergency period, the contract shall be available for inspection by the department.

(k) Notwithstanding any provision of this section or any other law to the contrary, any national disaster charitable organization shall be exempt from this section.

(l) As used in this section:

"Affected area" means the State, or any portion thereof, that is the subject of a declared federal disaster.

"Charitable fundraising platform" means any person that uses the internet to provide an internet website, service, or other platform to persons in this State, and performs, permits, or otherwise enables acts of solicitation to occur, which includes the following and any similar activity:

(1) Tier 1 activity;

(2) Tier 2 activity;

(3) Tier 3 activity;

(4) Listing or referencing by name one or more recipient charitable organizations to receive donations or grants of recommended donations made by the platform based on purchases made or other activity performed by persons who use the platform; and

(5) Providing to charitable organizations a customizable internet-based website, software as a service, or other platform that allows charitable organizations to solicit or receive donations on or through the platform, including through peer-to-peer charitable fundraising; provided that the customizable platform provided by the charitable fundraising platform does not include the charitable organization's own platform, but may integrate with the charitable organization's platform.

"Charitable fundraising platform" does not include:

(1) A charitable organization's own platform that solicits donations only for itself;

(2) A vendor that solely provides technical or supportive services to a charitable fundraising platform so that the charitable fundraising platform can function and operate, including vendors used for hosting or domain services, security certificates, internet access, internet application development, or digital payment processing. If that vendor also performs, permits, or otherwise enables acts of solicitation described by paragraph (1) on its own platform to persons in this state, it is a charitable fundraising platform for its own platform;

(3) A sponsoring organization of donor advised funds that solicits donors to open donor advised fund accounts or similar accounts, receives recommendations from donors on charitable organizations that may receive grants of funds previously contributed to the sponsoring organization for a donor's donor advised fund account, and the sponsoring organization does not list or reference by name one or more recipient charitable organizations for solicitation purposes on its platform for persons who do not have advisory privileges with respect to the granting of funds in a donor advised fund of the sponsoring organization; or

(4) A person or entity that meets the definition of both a commercial fundraiser for charitable purposes and a charitable fundraising platform shall be only a commercial fundraiser for charitable purposes when the person or entity for compensation performs any of the following acts of solicitation:

(A) Direct mail solicitation, excluding electronic mail or messages;

(B) Estate gift or estate planning solicitation;

(C) In-person solicitation through a fundraising event, door-to-door or other public spaces, or a vending machine or similar equipment that does not use a person to perform the solicitation;

(D) Noncash solicitation;

(E) Nonincidental acts of solicitation that are not internet based, including solicitation through print, radio, or television;

(F) Solicitation involving receiving something of value, or a chance to win something of value, in connection with a donation; or

(G) Telephone solicitation.

"Donor advised fund" shall have the same meaning as in section 4966(d)(2) of the Internal Revenue Code of 1986, as amended.

"Emergency period" means any period during which a declared federal disaster is in effect.

"Good standing" means that a platform charity, recipient charitable organization, or other charitable organization's tax‑exempt status has not been revoked by the Internal Revenue Service or is not prohibited from soliciting or operating in the state by the department.

"National disaster charitable organization" means the American Red Cross or United Way.

"Peer-to-peer charitable fundraising" means a solicitation campaign created by a person to support a recipient charitable organization, through or with other assistance provided by a charitable fundraising platform or platform charity.

"Platform charity" means a charitable organization that facilitates acts of solicitation on a charitable fundraising platform, which includes either of the following and any similar activity:

(1) Solicits donations through a charitable fundraising platform for itself from donors who use the charitable fundraising platform with the implied or express representation that the platform charity may grant donations to recipient charitable organizations; or

(2) Grants funds to recipient charitable organizations based on purchases made or other activity performed by persons who use a charitable fundraising platform.

"Platform charity" does not include a sponsoring organization of donor advised funds that solicits donors to open donor advised fund accounts or similar accounts, receives recommendations from donors on charitable organizations that may receive grants of funds previously contributed to the sponsoring organization for a donor's donor advised fund account, and the sponsoring organization does not list or reference by name one or more recipient charitable organizations for solicitation purposes on its platform for persons who do not have advisory privileges with respect to the granting of funds in a donor advised fund of the sponsoring organization.

"Recipient charitable organization" means a charitable organization that is listed or referenced by name on a charitable fundraising platform or by a platform charity for solicitation purposes.

"Tier 1 activity" means listing or referencing by name one or more recipient charitable organizations to receive donations or grants of recommended donations made by donors who use a charitable fundraising platform.

"Tier 2 activity" means permitting persons who use a charitable fundraising platform to solicit donations for or recommend donations to be granted to one or more recipient charitable organizations through peer-to-peer charitable fundraising.

"Tier 3 activity" means persons who use a charitable fundraising platform to select one or more recipient charitable organizations to receive donations or grants of recommended donations made by the platform, platform charity, or other third party person, based on purchases made or other activity performed by persons who use the platform.

"Trustee" means any person accepting or holding property or moneys on behalf of another person."

SECTION 2. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on January 1, 2042.

THE SENATE	S.B. NO.	2983
THIRTY-SECOND LEGISLATURE, 2024		S.D. 1
STATE OF HAWAII